Ministry of Environment, Norway

State Secretary Bernt Bull

Financing environmental investments

THE SOFIA CONFERENCE
SESSION 2:
23-25 October 1995

I have listened with great interest to Denmarks presentation of what donors can do to improve environmental financing. I agree that a larger proportion of concessional funding should go towards environmental investments; this will improve health and environment across all of Europe. I believe that close cooperation between donors and financial institutions within the Project Preparation Committee is one way of ensuring this.

The only measure of PPCs success is whether it can stimulate successful environmental investments in Eastern Europe. The PPC report shows that the PPC works as we intended it to do. We have, however, noted that some regions have not yet had viable investment projects to put forward. For Norway it is natural to point to North-West Russia as an area where we will be anxious to see successful project financing.

In the future cooperation on loan funding two main functions must be fulfilled. The first is to stimulate funding from CEE countries themselves by increased cooperation with national financing institutions and environmental funds. The second is to cooperate with the EAP Task-Force to ensure a positive investment climate.

Norway is cooperating with the other Nordic countries to make more efficient use of the limited grants available. We have decided to continue supporting new environmental businesses by buying «green equity» channeled through the Nordic Environmental Financing Corporation, NEFCO, and we have established a new Nordic fund for grant support so as to facilitate environmental loans. Thus, the Nordic countries have already taken steps to implement some of the recommendations of the Working Group on Environmental Financing.

Another interesting new development is the possibility of carrying out joint pilot projects to achieve the aims of the climate treaty. Together with the Netherlands, the UK and the EBRD, we have proposed that the PPC be used to facilitate such projects.

We all realize that the total aid that we can provide is very small compared to the needs. If donor grants are to work as intended, they must be matched by substantial efforts to make environmental investments pay their way. Stable and predictable regulations, more cost-related pricing of resources especially in the public sector, managerial skills and national mechanisms for brokering capital between borrowers and lenders are necessary elements to ensure environmental investments.

The EAP Task Force is the proper forum for discussing such issues, but only the funding bodies involved are able to provide firm data on the connection between policy reform and project success or project failure. Solid documentation by the PPC and follow-up by the Task force will ensure that these issues can be brought to the attention of governments in a systematic way.

I assure you that Norway will continue to follow up this work in the future.

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Lagt inn 23 oktober 1995 av Statens forvaltningstjeneste, ODIN-redaksjonen